What is the Difference Between CRR and SLR?

The main difference between CRR (Cash Reserve Ratio) and SLR (Statutory Liquidity Ratio) lies in the percentage and kind of reserves banks are required to maintain. Here are the key differences between CRR and SLR:

1. Meaning: CRR is the percentage of money that a bank has to keep with the RBI, while SLR is the proportion of liquid assets per a percentage of time and demand liabilities.
2. Form: CRR is maintained in the form of cash, while SLR is maintained in the form of cash, gold, and government-approved securities.
3. Purpose: CRR helps regulate the flow of money in the economy, whereas SLR ensures the solvency of banks.
4. Reserved With: CRR is reserved with the RBI, while SLR is reserved with commercial banks.
5. National Impact: CRR regulates the liquidity of the country, while SLR governs the credit growth of the country.

In summary, CRR and SLR are essential tools for central banks to regulate the banking system and manage monetary policies. While CRR focuses on liquidity control and short-term management, SLR ensures the solvency and stability of banks in the long run.

Comparative Table: CRR vs SLR

The main differences between CRR and SLR are presented in the following table:

CRR (Cash Reserve Ratio) is a compulsory reserve that banks must maintain with the RBI, which is a specified percentage of their net demand and time liabilities. This helps control the flow of money in the economy. On the other hand, SLR (Statutory Liquidity Ratio) is a requirement that banks must maintain a certain percentage of their net demand and time liabilities in the form of liquid assets, such as cash, gold, and government-approved securities. This helps ensure the solvency of banks.